Lanz v.

Lanz partnership
 Plaintiff, Robert Lanz, 22 year old became associated with his father, the defendant, in a
trucking business.
 The business was a falling out in 1990
 The plaintiff claims the business was a partnership and that he never received all of the monies
due to him. Defendant denies there was a partnership and says there was no money owing to
him.
 A partnership is essentially two or more persons acting together for a business purpose with a
view of making a profit.
 A receipt by a person of a share of the profits of a business does not of itself make him a partner
in the business.
 The plaintiff not only assumed no liability for debts of the business, either as a guarantor of
loans or otherwise, he also had no role in its management or operation. Pl. only works as a truck
driver.
 The defendant, the father wins.

Glacier Creek and Sabre Agency

 Glacier creek – Serge Cote President
 Sabre - Art Den Dug President
 They set up a joint venture Pemberton Benchlands Housing Corporation
o Sabre did the work to develop the land into lots (54 of them) to be sold
o After phase one (30 lots complete) and Sabre demanded to be paid after completion of
phase one (entitled to) and wanted to be paid for time and materials for $3,351,000
 Pemberton says their K is a fixed price K at $2.85 million
 Sabre says they do not have a fixed price K, Pemberton says they have construction K “CCDC2”
and it lists $2.85 million and Sabre asks to see the K
 Pemberton presents a photo copy of the K signed by Art Den Duyf
 Sabre hires a forensic documents examiner for the trial and concludes that Art Den Duyf’s
signature was lifted off a different K, put on this K, then photocopied and the original was
destroyed  forged K
 Pemberton then says that they have a tabulation (part of another K) and it says that the price is
$2.85 million but it is signed by Dave Patterson, a low level employee at Sabre
 Pemberton is trying to argue that Dave has apparent authority and it is binding against Sabre
 Sabre is entitled to the $

Pen-Bro v. Demchuck Partnership

Donald Demchuck, father of Elvis Demchuck is being sued under a lease agreement signed by his son, and is saying
that here is no basis for action against it since he had nothing to do with it and it was in the name of his son

Facts:

 2001 Demchuck and his son had discussions with a rep from Pen-Bro
  they were interesting in leasing the second floor of the building for a nightclub to open in the
spring of 2001
 Father and son were partners in the proposed business (and the brother may join in)
 Renovation plans were drawn up, discussions proceeded but transaction did not proceed
because father and son couldn’t come to terms regarding the brothers financial involvement in
the transaction
 In 2003, the pool hall on the main floor failed and assets were seized
o Elvis went to this business and told them that a transaction with the Bank of Nova Scotia
was contemplated whereby the assets would be purchased and that his father wanted
to carry on the business
 After the discussion, Elvis talked to the landlord and indicated that he urgently needed
something in writing to take to the Bank of Nova Scotia with the terms of the lease
 Elvis said him and his father would be involved in the business
 The landlord asked if Elvis was authorized to sign on behalf of his father and was told that he
was
 The written document was prepared in the sole name of Elvis as the tenant, set out the term of
ten years, rent to be paid, and allowed for immediate occupancy if tenant was successful in
purchasing the chattels of the pool hall from the bank
 The landlord made it clear that he had no intention of entering into an agreement with Elvis
alone
 Donald said he in no way agreed to be liable for the lease
o He never implied or indicated in writing or verbally that he was a partner or joint
venture participant in the business nor would he be liable for any payments owing
under the lease
o There was never an intention for him to receive a portion of the profits nor did he agree
to share any risk
 During this time, Elvis incorporated a company and asked that the formal lease agreement for
the premises be in the name of his company
 The landlord wanted a guarantee from Donald of the payments under lease and Donald refused
to provide the guarantee
Issue:

 Pen-Bro’s lawyer wrote a letter saying that Elvis and Donald need to recognize their obligation
and return the fully executed lease and guarantee at their earliest convenience
 If not, the will then be relying upon the offer to lease as it is an accepted binding document
Arguments:

 Donald says that he is entitled to a dismissal and that there is no evidence that he would
support the liability of the payments under the lease with his son
 Landlord argues that there are factual issues that cannot be determined in chambers and the
matter should go to trial
 Also, the statements are accepted and could argue before the trail that there is a partnership
and that it could be said that Elvis signed the document as Donald’s representative
Analysis

 Not a dispute of relevant facts – both parties do not deny any factual statements presented by
each other
 o The only conversations between them were two years later regarding the second floor
and for a different purpose
 Landlord argues that if the actions is allowed to go to trail it will demonstrate a partnership
o However, saying it needs to go to trail to prove the facts necessary to establish a
partnership is not an argument available once Donald has met the onus on him to show
that there are not relevant facts in dispute
 Since there are no factual disputes, the only other way to go to trail is if the law to the facts
result in a legal issue
o There was no fraud  no issue to go to trail
o Only liable for payments under the lease if he either executed the lease or a guarantee
of payments under it, agreed to indemnify the landlord, or was in a partnership or joint
venture with his son
 Is there a partnership?
o No evidence of a partnership
 No intention to share the profits as regular monthly payments are to be made,
no evidence of an express or implied partnership agreement
 Partnership by estoppel? No, the landlord swears to rely on Donald being a part
of the agreement, but there is no evidence of this
 Only evidence of reliance was on statements of the son and some discussion
occurring earlier in relation to another business
 No evidence of a partnership nor that Donald represented or knowingly allowed
himself to be represented as a partner
o There is NO partnership
 Is there a joint venture?
o Joint venture must have a contractual basis, as well as:
 A contribution by the parties of money, property, effort, knowledge, skill, or
other asset to a common undertaking
 A joint property interest in the subject matter of the venture
 A right of mutual control or management of the enterprise
 Expectation of profit, or the presence of “adventure” as it is sometimes called
 A right to participate in the profits
 Most usually, limitation of the objective to a single undertaking or ad hoc
enterprise
o No evidence a right of mutual control or management of the enterprise, an expectation
of profit or the presence of “adventure”, or a right to participate in the profits
o There is NO joint venture
Conclusion:

 No relevant facts in dispute – no need for trail on the facts

 No evidence to support the indicia of partnership, partnership by estoppel, or joint venture
 No issue that should go to trial
 Action against Donald is dismissed and shall have his costs of this application and of the action

Challenor v. Nucleus Financial

 Problem of when a provider of goods or services can obtain payment from a person for the value
of the goods or services received by that person when there is no contractual link between the
goods and the other person
Facts:
  C carries on the business of supplying consultancy services for computer software & systems
 Was engaged by Softek in April 2000, to provide services under verbal agreement
o In the course of providing the services, Nucleus was formed and assumed the assets and
undertaking of Softek
 Tricaster Holdings Inc. Is a private investment firm which held the majority of the shares of
Nucleus at all times
 In August, C and N made a verbal agreement to provide the same consulting services to N as an
independent contractor that they had done with Softek – no agreement or linkage of a
contractual nature was established by the plaintiff with Tricaster even though the plaintiff was
well aware that Tricaster had active involvement in finances
 C’s invoices to N were paid in due course up to December 2001, and C continued to provide the
services until March 2002
 Outstanding balance unpaid of $10,339
 No evidence was elicited by or on behalf of defendents that services rendered by the C and
described in the invoices were not provided or that the entitlesment of C for face value of the
invoices were disputed
 C obtained summary judgment for the outstanding debt against N, summary judgment against T
was dismissed  now in court
Issue:

 Whether C can obtain payment from Tricaster of its claim against Nucleus on the basis of:
o Piercing the corporate veil of Nucleus and Tricaster in relation to the undertaking for
which the plaintiff has supplied services
o An implied partnership existing between Nucleus and Tricaster in relation to the
undertaking for which the plaintiff has supplied services
Law:

 It would need to be proved that there is an applied partnership or joint venture between T and
N
o C would have to be entitled to assume that the services ordered by N were being
ordered by T
o Says that since the issuance of cheques had authorization of T, that they were a partner
in the business
o And sometimes communicated with T regarding N’s services
 T says there is no pleading by C or any evidence to support piercing of corporate veil (that T
used N for fraudulent or improper use)
 Further evidence:
o T and N were at different locations
o C in her work received assignments, instruction, and directions solely from N
o The payment for C’s services was drawn on N’s bank account regardless of authorization
procedures
 Past case law shows that there more be more evidence than issuance of cheques to be assumed
a partner
 The Plaintiffs position that the two corporations share a sufficient relationship of proximity to be
considered legal must be based on jurisprudence form employment law context  no
employer/employee relationship – plaintiff was an independent contractor
 Although C knew that T held majority of shares and was supplying funds, she was never told by
anyone at T that they would pay or be responsible for invoices to N and that involvement of T
 was not the sole reason that she continued to work for N after the succession of N to Softek’s
undertaking
Conclusion

 Charges are dismissed – no evidence of partnership

Partner: sharing of profit, capital

Data Business Forms v. Macintosh Change of status from SP to Corp.

 Data had a K with Glenn Macintosh “Macintosh Business Systems”  saw him as a sole
proprietor
 Later… Glenn incorporates a company called Maritime Business Forms Ltd.
 Later again, Glenn owes Data $14,000 and Data sues Glenn Macintosh for the debt
 Data sues Glenn and wins – only Glenn is liable because Data doesn’t know that he is doing
business through a corporation
 If Data had known about business with Maritime, they would have had all new contracts drawn
up – doing business with a corporation
 Glenn left the creditor to believe that they were dealing strictly with Glenn and not a
corporation, therefore Glenn is guilty
 There is an obligation upon a party who intends to rely on the fact of incorporation to claim
limited liability protection to give ample notice to suppliers of the change in status particularly
where the new business is carried on in the same premises and the former name is used; there
must be no doubt left in the mind of suppliers that what is being done is as agents and officers
of the new corporation.
 The mere giving and acceptance of the cheques should not have led to an inference that the
corporation had become the debtor in place of the defendants.
 The chequeds here had some value. But they represent only one factor among several entering
into the relationship between the parties. Their weight is dwarfed by the compelling
circumstances that over the entire period of the dealings the written offers to purchase and
invoices to which they gave rise continued to be written in a form indicative of personal liability
and inconsistent with corporate liability.
 If the plaintiff was not expressly informed, then certainly it ought to have had such knowledge
because of the multitude of indicia which show that the defendant were actually operating as
agents of the Limited.
 A person who changes his status from sole proprietor to an agency relationship must do more
than just hope that the new letterhead will be observed and absorbed by a person it is dealing
with in a contractual relationship as showing a change in status.
 The plaintiff should have knowledge of agency relationship and the existence of a Limited.
 Data or Pakfold had actual knowledge of the existence of the limited company and therefore
they did not have knowledge of the agency relationship between Mr. MacIntosh and the
Maritime Business Forms Ltd. Thus, the plaintiff is successful in its claim against Glenn
MacIntosh alone.

Rangen v. Deloitte & Touche

 Facts
-Rangen used financial statements from Deloitte as a judgement to lend money to The
Company
 -Rangen suffered economic losses and is claiming Deloitte had a duty of care; as a
supplier, Rangen would have used the statements

Issues
-Does Deloitte have a duty of care?
-Is there proximity? Foreseeability
-Can Rangen recover economic loss?

Law
For there to be proximity, there needs to be a relationship between the parties.
Foreseeability depending on whether Deloitte is aware that the documents would be
used. They have to know "WHO" is going to rely on them "WHEN" and "FOR WHAT
PURPOSE"

Application
-no relationship between Rangen and Deloitte
-Deloitte could not reasonably assume that the documents would be used by Rangen;
Unless auditors/accountants preparing financial statements in their ordinary commercial
business are made specifically aware of (1) the purpose and (2) that a specific third
party will be relying on their statements, they are not liable to any third party.

Conclusion
Deloitte owes no duty of care to Rangen
Deloitte not liable for economic loss

Hercules Management Ltd. v. Ernst & Young

 Facts
-Hercules was shareholder in real estate lending company
-EY was auditor for company
-Company went bankrupt and investors brought action against EY that audits were
negligent: claimed that they were using audits to monitor investments and would have
pulled money if they saw bankruptcy was impending
-No contract between auditor and shareholder

Issue
- Is there negligent misrepresentation?
- Do the auditors owe the shareholders a duty of care? Is there proximity?
- If so, is it negated or limited by policy considerations?

Law
First Question in Negligence:
Was there duty of care owed? YES
It was reasonable that Hercules would rely on the audited financial statements in
conducting their affairs ant that they may suffer harm if they were improperly prepared.
Reliance on the statements was reasonable given the relationship of the parties and the
nature of the statements themselves.

Was it negatived by public policy? YES

The purpose of the reports was to collectively assist shareholders in overseeing
 management
The reports were NOT prepared to assist in making personal investment decisions or for
ANY purpose other than the standard statutory purpose under the Business
Corporations Act (to oversee management)
There is an OVERRIDING concern of INDETERMINATE liability
"liability in an indeterminate amount for an indeterminate time to an indeterminate class"

Duty of Care
1. close relationship between P and D, reasonable contemplation of the D, careless on
its part may cause damage to P
-foreseeability and proximity passed

BUT
2. public policy reasons for limiting duty
-Failed for public policy reasons, where court had to limit duty to ONLY those plaintiffs
who used information for purpose for which it was created = Avoiding INDETERMINATE
LIABILITY

Conclusion:
The initial judgment is upheld and the appeal is dismissed

Strother v 3464920 Canada Ltd

 Facts
-Strother was tax partner at Davis LLP
-Tax shelter scheme where allowed to treat investment in film as risky = speculative and
NOT a capital asset = deductible from other income
-Monarch was Strother's biggest cilent
-CRA closes loophole and Strother says to Monarch that he does not have a fix
-Strother in 1998 (AFTER retainer with Monarch) starts business with an ex-executive of
Monarch to take profit from a new tax approach that Strother has figured out
-Strother did not advise Monarch about the new tax approach
-1999 Strother resigned from Davis and joined Sentinel as 50% shareholder
-Sentinel made profits approaching $130M

Issues:
1. Did Strother/Davis breach fiduciary duty owed to Monarch by accepting Sentinel as
client?
2. Did Strother breach fiduciary duty to Monarch by accepting personal financial interest
in Sentinel, and if so, is Davis liable for that breach also?
3. Did Strother wrongly use for his own/Sentinel's benefit confidential information
belonging to Monarch?

Law:
-Fundamental duty of lawyer is to act in best interest of his or her client to the exclusion
of all other adverse interests, except those duly disclosed by the lawyer and willingly
accepted by the client

-a lawyer has a duty to avoid situations where he has, or potentially may, develop a
conflict
 -the conflict must be (1) material and (2) adverse

-the "bright line" test is the rule that a lawyer may not represent one client whose
interests are directly adverse to the immediate interests of another current client - even if
the two mandates are unrelated - unless both clients consent after receiving full
disclosure (and preferably ILA) and the lawyer reasonably believes that he or she is able
to represent each client without adversely affecting the other

-The scope of the retainer was broad: in 1998, there was a continuing relationship of
trust and confidence between Monarch and Strother. Monarch was not dealing with
"used car salesmen or pawnbrokers whom the public may expect to operate on the basis
of "didn't ask, didn't tell"

-it was for Strother to demonstrate that the impact of Strother's financial interest in
Sentinel on Monarch was NOT material and adverse

-the court found that Strother put his personal financial interest into conflict with his duty
to Monarch, where it created a substantial risk that his representation of Monarch would
be materially and adversely affected by his interest

In Section 12 of BC Partnership Act, the "ordinary course of the business" test requires
Strother's wrong to be "so connected" with the partnership business that it can be said
that Davis introduced the risk of wrong that hurt Monarch by partnering with Strother.
In this case, Strother's wrongful act of being a rogue partner is "so connected" with
Davis' ordinary business as a law firm. Therefore, it passes the test and Davis is
vicariously liable.

Conclusion

Strother did not breach fiduciary duty to Monarch by representing Sentinel.

Disgorgement of:
a. Strother breached fiduciary duty to Monarch by taking a personal financial interest in
Sentinel. Remedy is prophylactic, which means Strother has to give up all personal
profits earned from Sentinel.
b. Davis is vicariously liable for Strother's breach of fiduciary duty, it must return all legal
fees paid by Monarch during the period that Davis simultaneously represented both
clients.

Pemberton Benchlands Housing Corp v. Sabre Transport Ltd

 CCDC2: contract price typed in as $2,859,765 with an appended 20 page list of itemized
construction costs totaling $2,859,765
On page 6 it is signed by Cote (President of PBH) on behalf of PBH and by Art Den Duyf
(President of Sabre) on behalf of Sabre
Sabre claims it is a forgery, so they bring in a VPD forensic examiner who concludes
that the signature is forged
In testimony, Cote admits that it was never used as a contract and that he had no clue if
it was signed by Art Den Duyf
The court concludes the CCDC2 did not form a contract between PBH and Sabre

The appended 20 page itemized list was the construction contract. It was signed by
"Dave Paterson" next to the words "Authorized Signature: Sabre Transport"
Dave Paterson is an employee and project manager for Sabre
Dave Paterson claims that he signed only so that PBH would have the necessary
documentation required in order to raise financing for the project

Art Den Duyf had no idea that the itemized list had been signed or even existed -
stipulates that there was no actual authority for Dave Paterson to sign
PBH claims "apparent authority"

Apparent Authority requires:

-Representation that agent had authority to enter into contract on behalf of company
-Such representation was made by someone with actual authority
-The other party was induced to enter into contract on basis of representation
-Under the constating documents, a company is able to enter into that kind of contract
and delegate that kind of authority
-The third party must be aware of any restrictions on the agent's authority

Analysis
-Fraud
-In regards to Dave Paterson's signing authority, he had no actual authority as no one
had given him the permission to sign documents. Apparent authority was also rejected
because the plaintiff could not prove conditions 1 or 2 of the test. Paterson had never
been given signing authority in the past so it could not be proven that an impression of
authority had been given to Pemberton and Pemberton could not prove they relied on
that representation.

Conclusion
-No representations were made by Art Den Duyf that Paterson had authority to sign as
agent, therefore, no apparent authority
-The court finds that there is no evidence that PBH and Sabre entered into a fixed price
contract